Medicare -Who Pays and How Much- Part II

(10/20/22)-Administration officials announced that Social Security beneficiaries will receive an 8.2% cost-of-living (COLA) increase in their checks starting in 2023.

At the same time they announced that the maximum amount of earnings subject to the Social Security payroll tax would be increased to$160,000 from $147,000. Employers and employees each contribute 6.2% of wages up to that amount, which is adjusted each year according to wage growth.

The trust fund that pays retiree benefits will be depleted in 2034, at which time its reserves will be depleted. At that time all beneficiary checks will be cut down to 77% if no action is taken to deal with this problem.

(2/8/22)-Most Medicare beneficiaries will be paying $170 a month for Medicare Part B which covers doctor’s fees, etc .If your 2020 federal income tax form (there is a 2-year look-back) was $91,000 for an individual, or $182,000 for joint filers) the monthly fee is increases proportionately according to your increased income. For the exact amount go to the Web site/

(10/18/21)-Social Security Administration officials announced that next year’s cost-of-living (COLA) adjustment to Medicare and Social Security checks will be 5.9%. On average, this will mean a $92 monthly increase for beneficiaries, bringing the average amount to $1,657 increase, according to the agency’s estimate.

This is the largest percentage increase since 1982.

The maximum amount of earnings subject to the Social Security tax will increase to $147,000 in 2022, up from $142,800 this year.

(9/2/21)- Senior administration officials said that because of higher inflation numbers this year, Social Security beneficiaries could see a 6% cost-of-living benefit increase in 2022 That would be the highest percentage benefit increase since 2008.

The Social Security Old-Age and Survivors Insurance Trust would be depleted in 2033, one year earlier than in their prior report in April.

The Disability Insurance Trust Fund is now expected to be depleted in 2057, which is 8 years shorter than in its previous report.

Medicare’s hospital trust fund is projected to be unable to pay all of its bills beginning in 2026, which is the same timeframe as in its last report

(10/20/20)- The 2020 premiums for Medicare Part B are based on a person’s modified adjusted income for 2018.

For an individual earning less than $87,000 or for couples earning less than $174,000 the premium is $144.60.

For an individual earning $87,00.01 up to $109,000, or for couples earning $174,000.01 up to $216,000 the premium is $202.40

For an individual earning $109,000.01 up to $136,000 or for couples earning$218,000.01 up to$272,000 the premium is $289.20.

For an individual earning $136,000.01 up to $163,000 or for couples earning $272,000.01 up to $326,000 the premium is $376.00.

For an individual earning $163,000.01 up to less than $500,000 or for couples earning up to less than $726,000 the premium is $462.70

For an individual earning $500,000.01 and above or for couples earning $750,000.01 and above the premium is $491.60

(11/27/19)- Congress in 2003 legislated that higher earners should pay surcharges for their coverage under Medicare Part B in 2007, and Part D in 2011.

For 2020- Part B and Part D  have a surcharge that applies for singles who had more than $87,000 of income and couples with more than$174,000, based on their 2018 tax return. Income is defined as adjusted gross income plus tax-exempt interest, such as tax free municipal bonds.

For 2018, the latest year for which data was available, about 7% of 54.6 million total Part B recipients’ owed premium surcharges for their coverage, according to Juliette Cubanski, an analyst with the non-profit, non-partisan Kaiser Family Foundation.

(10/12/19)- Officials of the Social Security Administration announced that there will be a 1.6% cost-of-living increase in benefit checks to beneficiaries starting in 2020, versus the 2.8% increase last year.

The average beneficiary monthly cost-of-living check would increase by about $24 per month. The increase is based on the Labor Department’s consumer-price index of urban wage earners and clerical workers, or CPI-W.

(10/23/18)- The trustees of the Medicare Hospital Insurance Trust Fund reported that the fund would be depleted by 2026, or 3 years earlier than last year’s evaluation.

In a companion report, federal officials the Social Security Trust Fund for old-age benefits, and disability insurance could be depleted by 2034, which was the same year as estimated last year.

Tax collections would be sufficient to pay about three-fourths of promised Social Security benefits for 75 years.

Medicare and Social Security account for about 40 % of all federal spending. Average beneficiary levels for disabled workers were “lower than expected in 2017 and are expected to continue to fall.” in the coming years.

Medicare spends about $13,600 a year per beneficiary, and in five years the annual cost is expected to grow to$17,0 00, according to the report.

In 1960 there were about 5 workers for every Social Security beneficiary. That ratio fell to about 2.6 workers for every beneficiary in 2017.

(2/25/18)- Starting in 2019, individuals with income of $500,000, or more and couples earning $750,000 or more will be taken out of the current top bracket and be required to pay 85%of the costs of their Medicare parts B and D benefits, up from 80% now.

Medicare beneficiaries with income of $85,000 or less for individuals and couples with $170,000 or less now pay 25% of the costs of their benefits.

This increase comes on top of the increase that went into effect on Jan. 1wherein Medicare beneficiaries with incomes of $133,501 to $160,000 for individuals, or $267,001 to $320,000 for couples now must pay 65% of the costs for their part B and part D benefits, up from 50% before Jan. 1.

Starting in 2020, the income thresholds are due be adjusted for inflation.

The standard part B premium for 2018 is $134 per month. Those in the new 85% cost sharing requirement would pay $312 on top of the $134 standard premium.

The new budget law closes the so-called “doughnut hole in Medicare Part D coverage. Pard D coverage typically cover 75% of the cost of drugs, with the plan participant covering the other 25%. After the participants drug costs exceed $3750 in 2018, the participant pays 35% of the drug costs up to $5,000.

Once the drug costs exceed $5,000, the participant in a part D plan pays only 5% of the drug’s cost. Starting next year, the participant will pay 25% of the drug costs, until the $5,000 level is reached.

At that $5,000 level, the participant’s cost will drop to the 5% level.

(2/11/18)- The new budget signed into law by President Trump will increase premiums for Medicare beneficiaries with income of more than $500,000 for individuals a year and $750,000 for couples filing jointly

The law would abolish the 15 member Payment Independent Advisory Board established under the terms of the Affordable Care Act to control the rising costs of Medicare. Members of the board were never appointed.

The bill also includes an additional four-year extension of funds for the Children’s Health Insurance Program from 2024 through 2027, on top of a six-year extension that Congress approved last month

The bill would provide some relief to Medicare beneficiaries drug costs who hit the “doughnut” cost for their drugs. The bill provides$3.8 billion for the current fiscal year  and $4 billion for fiscal year 2019to fund community health-centers, up from $3.6 billion last year

(10/16/17)- Social Security officials announced a 2.2% increase for monthly checks starting late in December for disability beneficiaries and in January for Social Security beneficiaries. This is the largest increase since a 3.6% increase in 2012

The maximum amount of earnings subject to the Social Security tax will increase next year by $1,500 to $128,700. The workers share of Social Security payroll tax is 6.2% of eligible wages .Employers pay the same rate.

About 66.7 million people will therefore receive a boost in their income next year that will come to on average, $27.38 a month for retiree beneficiaries, and $23.44 for disability beneficiaries

Premiums for Medicare Part B premiums  for next year have not been announced yet.

(3/15/17)- By a vote of 55 to 43, the Senate confirmed the nomination of Seema Verma to be the administrator of the Centers for Medicare and Medicaid Services (CMS)

Ms. Verma worked alongside Vice-President Mike Pence when he was governor of Indiana, when that state passed its expanded Medicaid program. Indiana negotiated with federal officials to permit increased premiums from beneficiaries in the program, contribute to health savings accounts, and receive incentives for healthy habits.

Expanded Medicaid now covers 70 million low-income individuals in 38 states. Medicare insures about 57 million people who are 65 or older, or have disabilities

(10/20/16)- Officials of the Social Security Administration announced that the maximum amount of earnings subject to the Social Security tax would rise to $127,200 in 2017 from its 2016 level of $118,500.

That represents a 7.3% increase and would affect an estimated 12 million workers. Employees’ share of the Social Security payroll tax is 6.2% of eligible wages. Employers also pay a 6.2% tax on eligible wages. Self-employed individuals pay both the employer’s and employee’s share of the tax.

That increase in taxable earning cap is the largest percentage increase since 1983.

(10/19/16)- There will be a 0.3% increase starting January 1, 2017 to Social Security beneficiaries because of the formula set for such yearly increases under the consumer price index (CPI-W). The average retired worker collecting this benefit will see his/her monthly check go up to $1,360 from $1,355.

(5/10/16)- The results of a study that was published in a recent edition of the journal Health Affairs showed that 231 hospitals got bonus payments through the Hospital Value-Based Purchasing program because their Medicare patient costs were less than at other facilities, even though they had below-average quality scores.

The CMS said it will consider changing the program so hospitals scoring below the national median in quality would not get bonuses

\(4/20/16)- The non-partisan Medicare Payment Advisory Panel (MPAC) voted recently to recommend that Congress cut the federal share of catastrophic payments to reimburse insurers from 80% to 20%for Medicare beneficiaries whose  drug costs reach the “catastrophic” level, which currently is about $7,500. The panel will also recommend the elimination of the 5% payment from Medicare beneficiaries for their drugs over the “catastrophic” level

These recommendations will be included in a June report to Congress.

Over 40 million of the 56 million Medicare beneficiaries have drug coverage through their Part D plans. Part D coverage was first adopted as part of Medicare in 2006

(4/3/16)- All hospitals in a randomly selected 67 metropolitan areas, including New York City and Los Angeles began the first of the so-called bundled-payment initiatives on April 1 .The new rules will hold hospitals accountable for all the costs of hip and knee replacements for 90 days

These 67 hospitals together perform about one-third of the 430,000 hip and knee replacements that Medicare covers annually. About one-half of the hip and knee-replacement patients spend time in skilled nursing facilities, rehab hospitals or other “post-acute care sites, which adds substantially to the cost. An additional 33% of these patients get care from home-health agencies.

Starting next year, hospitals can move patients to skilled-nursing facilities faster, without keeping them for three nights first as Medicare rules now require. Only nursing homes wi9th a three-star rating or higher, from the centers for Medicare and Medicaid Services (CMS) will be eligible.

Depending on the area where the hospital is located will determine what the amount of the bundled package for knee and hip-replacement surgeries will receive. The amount will range from $16,000 to$35,000.

For hip-fracture patients getting joint replacements the payment would be $60,000, since these tend to be older and more frail.

(10/24/15)- About 30% of the 52 million people enrolled in Medicare Part B could see a 52% rise in their premiums if Congress and the Obama administration don’t find a way to reduce the increase. The premium increase could affect about 9 million lower-income Medicare beneficiaries whose premiums are paid by state Medicaid programs because they are eligible for both

About 3.1 million participants would be subject to the rise because of their incomes. The Medicare trustees projected that single individuals earning between $85,000 to $107,000-and couples earning $170,000 to $214,000- would see monthly premiums rise from $146.90 a person this year to $223 in 2016

(10/7/15)- Medicare actuaries had predicted in July, that Medicare premiums for about 30% of its beneficiaries could rise to $159 a month versus the present standard premium of $105 a month, the same as 2013 and 2014. Both President Obama and Congress are trying to negotiate the amount of the increase

It looks like there will not be any cost-of-living increase in 2016 for Social Security beneficiaries.

The actuaries also predicted an annual increase in the annual deductible to rise to $223 from its present $147 amount.

The formula for setting the amount of the premium is set by law, but secretary of health and human resources Sylvia Matthews Burwell has some discretion in that matter. Medicare has a “contingency reserve” in case spending turns out to be higher than expected for Medicare, but that fund is already lower than what Medicare actuaries recommend.

(4/16/15)- The Senate cleared the bill by a vote of 92-8 that we discussed in our items dated 4/8/15 and 3/28/15 below, that would change the formula for calculating payments to doctors, and other medical professionals who treat Medicare patients. Both parties praised the bill and President Obama said he would sign the measure.

The increased premium for wealthier Medicare beneficiaries will not take place until 2018, and the Medicare changes would take effect for people who enroll after 2018. Under the old formula doctors would have faced a 21% cut in Medicare fees. Under the new formula, physicians will receive a 0.5% annual pay raise starting in July, with additional pay raises of 0.5% through 2019

New spending would total $211 billion over 10 years, according to the estimate from the Congressional Budget Office. Higher income Medicare beneficiaries would pay additional premiums totaling $35 billion and Medicare would save about that same amount by cutting payments to hospitals, nursing home and home health agencies.

Medicare spent $70 billion last year under the fee schedule, and that accounted for about 12% of all Medicare spending.

(4/8/15)- Under the terms of the John Boehner- Nancy Pelosi bill passed by the House that would change the payment formula for doctors under Medicare, the Children’s Health Insurance Program would be extended for two more years, rather than the 4 years that Democrats were hoping for. More money would be appropriated for community health centers, with a restriction for abortion services.

Higher income earners would pay higher premiums for their Medicare coverage. The Congressional Budget Office (CBO) estimated that the bill would add about $141 billion to the federal budget deficit in the coming decade, compared with existing law

Congress has passed 17 short-term bills to block cuts in Medicare fees for doctors, since 2003. The Senate will take up the measure when it resumes its session after its Easter break

(3/28/15) The House voted 392-37 to repeal the formula used to determine doctor’s reimbursement rates, as we discussed in our item dated 3/27/15, and institute a new system that includes small pay raises for doctors through 2019

House Speaker John Boehner (R.-Ohio) and Minority Leader Nancy Pelosi (D.-Calif.) crafted the legislation that easily passed in the House with bipartisan support. The measure now goes to the Senate, which has gone into recess on Fri., so it will now take up the bill in two weeks. President Obama has given his approval to the action by the House

(3/27/15)- Congress is making another attempt to permanently fix the formula for calculating Medicare reimbursements to doctors and other health-care providers, but the proposed legislation certainly faces a rocky-road ahead.

The proposed legislation would replace the current formula, which was established by the Balanced Budget Act of 1997, that tied pay increases to the medical community to increases in economic growth. The problem has arisen because health-care costs have exceeded economic growth. That in turn led to the yearly “doc fix”, wherein Congress overrode the formula because it would have resulted in cuts to Medicare providers, who in turn were threatening to leave the Medicare program.

Under the formula, health-care providers were faced with a 21% cut in their reimbursement rate starting April 1.

The legislation also includes funding for a program that provides health-care coverage to children from low income families, that was estimated to cost $200 billion over 10 years. Hifgher-income Medicare beneficiaries would be required to pay higher monthly-premiums for their coverage.

Under the proposed legislation, providers would receive increases of 0.5% annually from 2015 through 2019, before the government transitions to a new incentive based system. That incentive based system would result in an increase of 1% annually starting in 2026

(1/18/15)- Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services (CMS) said in an e-mail to agency employees that she would be stepping down at the end of February. She had joined the administration in February 2010, and had been confirmed as administrator by the Senate in May 2013.

Sylvia Matthews Burwell, the secretary of health and human resources, accepted the resignation in a statement that praised the job that she had done.

Ms. Burwell said that Andrew M. Slavitt, the No. 2 official at the CMS, would become the acting administrator. The Senate must approve the permanent administrator for the CMS, and with the Republicans now heading that body, the next nominee will face some tough sledding before gaining approval for the job.

(11/12/14)- The Centers for Medicare4 and Medicaid Services (CMS) will extend coverage for CT scans to Medicare beneficiaries who smoked at least a pack a day for 30 years or the equivalent, even if they quit as long as 15 years ago. The free scans would apply to beneficiaries through the age of 74

Under the Affordable Care Act, private insurers must cover these screenings, but it did not require Medicare to do so. The proposal is open for public comment for 30 days, and would not become final until February. The proposal would also cover about 480,000 beneficiaries ages 55 to 64 who qualify for Medicare because of certain disabilities. CT scans can detect much smaller tumors than a chest X-ray and cost Medicare about $2341 per person screened.

Lung cancer causes about one-fourth of all cancer deaths, with the disease claiming about 160,000 lives a year

(10/24/14)- Social Security recipients will receive a 1.7% increase in their monthly checks starting January 1, 2015. The amount of the increase is based on the consumer price index known as CPI-W. For the average beneficiary it will mean about a $20 monthly increase. This increase, which is called a cost-of-living increase, was 1.5% in 2014 and 1.7% in 2013

Social Security is financed by a 12.45 % payroll tax on the first $117,000 of a worker’s wages, with half being paid by the worker and the other half being paid by the employer. That wage cap will go up to $118,500 next year

(10/12/14)- Most Medicare beneficiaries will pay the same monthly premium of $104.90 for their Part B coverage. Part B covers doctor’s visits, outpatient care, labs and medical supplies. Higher income beneficiaries will pay higher premiums, depending on their income levels.

Annual deductibles will remain the same at $147 for services rendered under Part B in 2015 as they were in 2014. The deductible for Part A, which covers hospitalization, will increase to $1,260 for the first 60 days of an illness, up from $1,216 in 2014.

Beneficiaries in a skilled nursing facility will pay $157.50, a day after their 20th day there in 2015, up from $152 a day in 2014

(8/2/14)- In its annual report from the trustees (4 federal officials and 2 public representatives) of the Medicare and Social Security Trust Funds, it was estimated that the standard monthly Medicare premium will be $104.90 next year, unchanged from 2013 and 2014.

In addition, the trustees said that Medicare spending per beneficiary averaged $12,210 last year, the same as in 2012, and it is expected to be about the same in 2015.

(7/18/14)- The latest report from the Congressional Budget Office (CBO) estimated that Medicare will remain financially solvent through 2030.The report stated that Medicare’s financial situation had improved sharply from its estimate in February of 2025. That’s the good news. Now, will that take the pressure off fixing the problems with the system?

On the other hand, the CBO reported that the Social Security’s outlook was slightly worse than it had previously predicted. Lower future payroll-tax revenue and low interest rates would widen the program’s shortfall between revenue and spending over the next 75 years.

Medicare is expected to spend about $500 billion this year on benefits for 54 million Americans.5 years. The report went on to estimate that about 70 million Americans will qualify for benefits by 2030.The Affordable Care Act of 2010 has cut more than $700 billion in Medicare spending to offset increases in spending to expand health insurance coverage to lower-income Americans

(6/8/14)- The Senate, by a vote of 78 to 17 confirmed Sylvia Matthews Burwell to be secretary of health and human services. All the no votes were cast by Republicans. 24 Republicans, 52 Democrats and the 2 independents voted for confirmation.

As secretary she will also be responsible for Medicare and Medicaid which insure more than 100 million Americans; the National Institute of Health; and the Food and Drug Administration.

(4/16/14)- Sylvia Matthews Burwell, 48, a West Virginia native has been nominated by President Obama to replace Kathleen Sebelius as Secretary of Health and Human Services. Ms. Burwell had been confirmed as budget director in April 2013 by a Senate vote of 96-0.

She is a graduate of Harvard and Oxford, and has worked in the administration of President Bill Clinton, on the National Economic Council and in the Treasury Department under former Treasury Secretary Robert Rubin. She had served as both chief of operations and head of the global development program at the Bill and Melinda Gates Foundation.

She then went on to serve as president of the Walmart Foundation before being recruited to join the Obama administration

(3/22/14)- Under Medicare costs, most beneficiaries pay no premium for Part A, which covers hospital visits. Most of those who are covered will pay a premium of $104.90 a month for their Part B coverage in 2014 (and a $147 annual deductible) for doctors’ visits, tests and other treatments

They also co-pay 20% for Part B coverage. Higher-income people pay higher monthly premiums, depending on their adjusted gross income.

Part D covers prescription drugs through private insurers. Many Medicare enrollees also purchase Medigap supplemental policies to help cover the cost of their Medicare co-pays, and other medical costs not covered by Medicare.

(3/6/14)- Federal law prohibits pharmaceutical companies from giving payment assistance to patients insured by federal programs such as Medicare and Medicaid. That law is aimed at preventing the encouragement of unnecessary drug usage. The question therefore arose as to whether or not that law barred drug companies from making co- payments for drug usage for the newly insured who bought health-care coverage through one of the new online exchanges that came into being under the Affordable Care Act.

Since the government is giving subsidies to many of the newly insured, does that prohibition apply to this situation?

Health and Human Services Secretary Kathleen Sebelius ruled that it is not a violation of the law. In a letter to Rep. Jim McDermott (D., Wash.) she stated that this insurance is not a “federal health-care program.

(2/8/14)- The silliness of the of the 1997 budget law aimed at restraining Medicare payments to physicians, which has never taken place since the law was passed, may be finally coming to an end. The law established a formula for determining physicians’ fees was tied into economic growth. When health-care costs rose faster than economic growth and doctors threatened to leave the Medicare program, Congress would intervene every year, since the formula called for cuts to those fees.

Under the formula, physicians’ fees were to be cut by 24% in 2014, but under a 5-year deal arrived at by Congress, the payments would increase by 0.5% every year for the next 5 years. The new bill would also offer bonuses to health-care providers who agree to have their reimbursements based on results, not on the volume of service they provide.

Congress had agreed to a 3 month postponement of the 24% cut that was to have taken place this year.

That Balanced Budget Act of 1997 law called for increases in federal cuts to offset any increases in spending. Now the question arises as to how that provision will be met, since Medicare spending will be increased?

(1/13/14)- Enrollment in Medicare increased by 4% in 2012, the largest one-year increase in its 39 year history, according to a report issued by the Centers for Medicare and Medicaid Services. More than half of the new beneficiaries joined Medicare Advantage plans. More than one-fourth of the 50 million Medicare beneficiaries are now enrolled in Medicare Advantage plans.

Spending on Medicare increased 4.8%  to $573 billion, in 2012. Federal and state spending for Medicaid grew 3.3%, to $421 billion in 2012, according to the report.

According to the Medicare law formula, payments to physicians are due to be cut by 24% starting in 2014. Although the formula may call for cuts to physicians, in reality, this has never happened before, and it will not happen this time either.

The House Energy and Commerce Committee unanimously passed legislation in July to fix this problem and the Senate Finance Committee is now considering legislation for the “doc fix”.

The Congressional Budget Office (CBO) lowered its projection for the expense of repealing the current system to $116 billion over a decade, down from the previous estimate of over $300 billion. The Senate proposal, written with the help of the House Ways and Means Committee, would freeze current Medicare rates over the next decade, but give extra payment to doctors who meet certain performance criteria.

The House Energy and Commerce Committee has proposed a bill that would provide small annual increases, along with performance incentives.

The problem relates back to a measure passed in 1997 that cut reimbursement rates tied to a formula which allowed increases tied to the growth in the economy and health care costs. When health care costs exceeded the rate of growth in the economy, the formula began to call for cuts in the payments to the doctors.

Starting in 2015, physicians can collect a separate fee from Medicare for managing patients with 2 or more chronic conditions apart from face-to-face visits, according to the final version of the 2014 Medicare physician fee schedule

(11/1/13)- The Centers for Medicare and Medicaid Services announced that Medicare Part B monthly premium will remain at $104.90 in 2014, as it was in 2013. Those beneficiaries with higher adjusted gross income will have to pay higher premiums.

The Social Security Administration announced that its payments to 63 million beneficiaries and the disabled will increase by 1.5% beginning in January 2014, which would be one of the smallest percentage increases since the program started in1975. This annual adjustment is calculated according to how much the consumer price index rises during the third quarter of the year from the same quarter in the prior year.

The Social Security increase was 1.7% in 2013, following no increases in 2011 and 2010.

The average Social Security check will rise by $19 a month to $1,294 beginning in January.

(10/2/13)- If you are 65 years of age or older, and have group health plan coverage under your or your spouse’s current employment, and the employer has at least 20 employees, your group health plan pays first.

If you are 65 years of age or older, and have group health plan coverage under your or your spouse’s current employment, and the employer has less than 20 employees, Medicare pays first.

(5/17/13)- In a 91-to-7 vote, the Senate confirmed Marilyn Tavenner as administrator of the Centers for Medicare and Medicaid Services (CMS) as we noted in our item dated 4/16/13 below. She had been the acting administrator since December 2011.

The agency provides health insurance to more than 100 million people and spends more than $800 billion a year. Incidentally, the CMS spends more than does the Department of Defense on a yearly basis.

Ms. Tavenner is the first Senate-confirmed administrator since Dr. Mark.B. McClellan stepped down in 2006. The Senate Republican leader, Mitch McConnell of Kentucky was one of the 7 who voted against her confirmation.

Mr. Obama's first choice for the job, Dr. Donald M. Berwick, never won Senate confirmation. The president circumvented Congress by giving Dr. Berwick a temporary recess appointment, which lasted for 17 months in 2010-2011

(4/16/13)- Marilyn Tavenner, who is the acting head of the Centers for Medicare and Medicaid Services, is expected to be confirmed as the program's first administrator in 7 years. For more background information on Ms. Tavenner, please see our item dated 11/29/11 below.

No permanent administrator of the CMS has been appointed in the last 7 years because of the political divide in Washington that has existed the last few years making it impossible to get any nominee acceptable to both parties. Mark McClellan, a Republican, was the last administrator of CMS, when he stepped down in 2006.

It is estimated that there are now100 million Americans in these programs. The agency has a budget of about $820 billion in 2012.

(4/10/13)- As the government comes to face up to the growing cost of Medicare, one of the proposals presented by the 2010 deficit reduction panel chaired by Republican Alan Simpson and Democrat Erskine Bowles is coming to the forefront again, namely that Part A and Part B of Medicare be combined. Although none of the panel's recommendations were adopted, this one seems to be making headway in Washington these days.

Payroll taxes and premiums paid by beneficiaries covered around half of the $548.1 billion in expenditures for Medicare in 2011.

Payroll-tax revenue covers most of the cost of Part A hospital care. This coverage has a $1,184 annual deductible, but beneficiaries do not have to pay further cost sharing on the first 60 days of a hospital stay. Co-payments charges increase sharply thereafter.

Part B has a basic premium set at $104.90 a month this year, and a $147 annual deductible and 20% cost sharing. There are no caps on the amount that s beneficiary pays out-of-pocket..

The deficit-reduction panel recommended that the deductible be combined into a single $500 deductible, and a 20% cost of care until that reached a certain cap.

Under the cap, beneficiaries would pay a much smaller share after the first $5,500 of costs and no more than $7,500 out-of-pocket in total.

The combined effect of the changes could save the U.S. $10 billion in 2015 and $110 billion through 2020.

Under the terms of The Patient Protection and Affordable Care Act, Medicare will cover an annual wellness visit that includes detection of "cognitive impairment". Once diagnosed, patients can be helped with family support, medication management and brain games to help delay further decline.

(12/23/12)- Of the 1.1 billion claims submitted to Medicare in 2010 for hospitalizations, nursing home care, doctor's visits, tests and physical therapy, 117 million were denied. Of those, only 2 percent were appealed. And for those who persevere and do appeal a third time, the OIG found that the judges reversed 56 percent of all unfavorable decisions in 2010.

(11/24/12)- Medicare Part B premiums will rise by $5 per month starting in January to $104.90 per month. This rise in premium will amount to about one fourth of a typical retiree's cost-of-living raise in Social Security payment next year.

The Part B premium, in most cases, is deducted from the beneficiary's Social Security payment.

(11/10/12)- Family physicians will get a slight boost in their Medicare payments for the calendar year 2013. The payments for family physicians will rise by about 7 percent in January under a final 2013 rule that the Centers for Medicare and Medicaid Services (CMS) released htis week. Other practitioners who also provide family care services would get payment increases of about 3 to 5 percent next year.

The increase for family physicians is affected in part by an administration plan to provide a separate payment to physicians or practitioners who coordinate the care for patients in the 30 days after the patient is released from a hospital or skilled nursing facility. The goal is to reduce problems that can occur after a patient is discharged.

(10/16/12)- The results of a recent study that examined how effective are the Medicare reimbursement rates which were tied into the reduction of hospital-acquired infections found that they have no impact in reducing the infection rate.

The policy went into effect in 2008 and examined the change on bloodstream and urinary-tract infections related to catheters. The results of the study were published in the New England Journal of Medicine. It was funded by the Agency for Healthcare Research and Quality.

The policy was supposed to ensure that hospitals did not get paid additional money for infections that were deemed avoidable. The study covered the period of time from January 2006 through March 2011.Grace Lee was the study's lead author.

After the policy change there were "no significant changes" in the rates of any of these conditions nor of a third condition, ventilator-associated pneumonia.

(8/24/12)- Republican vice-presidential nominee Representative Paul Ryan's plan to revamp Medicare would not change the present system for those 55 and older. Those younger than 55 would be given the option of staying with the present system or to enroll in a privately run health-insurance plan.

In cutting an estimated $716 billion over 10 years under the terms of the Patient Protection and Provider Act through cuts in payments to providers, and elimination of "the doughnut hole", the Ryan plan opposes this type of solution towards "saving Medicare". He would not cut back on payments to providers to the extent that Obama would.

(8/4/12)- Any Medicare beneficiary can tell you that his/her Medicare card contains their Social Security number on it. As we all know, that is an open invitation to have that number stolen. Five years after first being told to have that number removed from the cards, Medicare officials say that they need at least 6 more months to figure out how much it will cost to replace our Medicare cards.

The Government Accounting Office estimates that there are as many as 48 million Medicare card holders who will need to have their cards replaced.

(7/20/12)- Most individuals covered by an employer's health plan opt out of Part B, since the premium runs about $1,199 for most people, but can be much higher if your adjusted gross income runs into the high brackets.

When you stop working, you can sign up for Part B during a special enrollment period that lasts eight months following your final day of employment.

The clock for the eight months period of time to be eligible to enroll starts running when you leave the job.

(7/17/12)- Medicare Part A covers hospital stays and has a deductible of $1,156 this year, that covers hospitalization for up to 60 days. You do not pay any premiums for Medicare Part A. From days 61 through days 90 of an in-hospital stay there is a co-payment of $289 a day, and co-payments for days 91 through 150 of $578 a day.

Medicare Part B is optional medical insurance that covers doctors' bills, lab tests and outpatient care. The basic premium is $99.90 a month, although it can be as high as $319.70 for an individual earning $214,000 or more a year. The deductible is $140 a year, and co-pays are 20% of Medicare approved amounts

(5/14/12)- This year's medical care costs for a 65-year-old retired couple would come to about $240,000 to cover medical costs through retirement, according to a report from Fidelity Investments. That is a 4% increase from last year's estimate. The original report from Fidelity in 2002 estimated the cost to be $160,000. It is based on the couple being in the traditional Medicare plan rather than in an HMO or Medicare Advantage plan.

The estimate is based on the life expectancies of 17 more years for the male and 20 years more years for a female.

The estimate takes into account Medicare premiums, deductibles and co-insurance for medical costs as well as for prescription drugs. It also includes possible costs for routine vision and hearing exams, eyeglasses and hearing aids.

It does not include potential costs for dental services, over-the-counter drugs or long-term care.

(5/12/12)- According to, a Kaiser Family Foundation website, there are 47,672,971 Medicare beneficiaries in the United States. California has the most at 4,806,469, followed by Florida at 3,390,801, Texas at 3,044,936, New York at 3009,756 and Pennsylvania at 2,290,509.

(12/25/11)- President Barack Obama signed the law that would extend for two months the cut for an employee's share of the Social Security payroll tax at the current level of 4.2% of wages through February 29, 2012. In the absence of Congressional action, the tax would have reverted to the 6.2% level. Employer's share of the tax will remain at 6.2%

Under the law, the federal government will also continue to pay unemployment insurance benefits under current policy through February 29, 2012.

Medicare will continue to pay doctors at current rates for two months, thus averting a 27% cut that was due to take place on January 1, 2012

(11/29/11)- Dr. Donald M. Berwick announced that he would be stepping down as administrator of the Centers for Medicare and Medicaid Services at the end of the month. His temporary recess appointment was due to expire at the end of the year.

President Barack Obama first nominated Dr. Berwick in April 2010 but he never received a Senate confirmation hearing. His nomination had been strongly opposed by at least 40 Republican Senators.

Mr. Obama said he would nominate Dr. Berwick's principal deputy, Marilyn B.Tavenner, to succeed him as administrator.

Ms. Tavenner started in the medical field as a nurse who then joined the Hospital Corporation of America as a nursing supervisor, then becoming an executive with the company and eventually she became the president of HCA's outpatient services group. She was a past secretary of the Virginia Department of Health and Human Resources, and has also served on the boards of the American Hospital Association and the Virginia Hospital and Healthcare Association.

(11/3/11)- Most Medicare beneficiaries will pay $99.90 a month in premiums in 2012, which is a $3.50 increase over the $96.40 premium that most beneficiaries had been paying for Part B for the past three years.

A law had prevented most Medicare premiums from rising if Social Security payouts stayed flat, which has been the case since 2008. With an increase of 3.6% in cost-of-living for Social Security beneficiaries announced by the Social Security Administration last week, an increase in Medicare premiums thus came into play.

Individuals in the higher-income group (individuals who earn over $85,000 a year, or couples earning over $170,000 a year) paid higher Medicare premiums in each of the past three years to make up for the freeze for lower-income recipients. Their premiums will fall next year. About 5% of Medicare beneficiaries now pay higher premiums based on income, but this proportion would eventually rise to 25% under a deficit-reduction plan proposed by President Obama last month.

All Medicare beneficiaries will see lower deductibles next year for medical treatment. The annual deductible will be $140, down $22 from the current rate. Deductibles for Part A hospital treatment will rise by $24, putting them at $1,156 a stay.

(9/30/11)- President Obama's new deficit-reduction plan which aims at reducing the deficit by more than $3 trillion over 10 years, beyond the $1 trillion in saving already assumed under the debt limit law signed in August will impose "a lot of pain".

The proposal would require new beneficiaries to pay higher deductibles before Medicare coverage of doctors' services and other outpatient care kicks in. The plan would increase the deductible, which is now $162 a year, adjusted for inflation, by a further $25 in 2017,2019 and 2021.

In addition it would increase Medicare premiums by about 30% for new beneficiaries who buy private insurance to help fill gaps in Medicare.

About 5% of the 48 million Medicare beneficiaries now pay higher premiums because of income levles. The proportion would eventually rise to 25% under the proposal.

The plan would lower Medicare payments to teaching hospitals, and would also start charging co-payments to frail homebound older people who receive home health services. It would reduce the growth of federal payments to states for treating low-income people under Medicaid.

It would reduce the projected growth of Medicare in the next 10 years by $248 billion and by $72 billion from Medicaid and other health programs.

Medicare and Medicaid insure more than 100 million beneficiaries and account for nearly one-fourth of all federal spending. The proposed savings would cut less than 3% of what the government expects to spend on the programs in the next 10 years.

(6/18/11)- Aetna Inc., one of the nation's largest health insurers announced that federal regulators had lifted the sanctions on the company that had prevented it from marketing Medicare plans and enrolling new beneficiaries.

Aetna currently has about one million Medicare Advantage and drug plan beneficiaries and is seeking to expand in this area. The company also announced that it had purchased the Medicare supplement business of Genworth Financial Inc. for about $290 million. Medicare supplement businesses provide protection against out-of-pocket expenses incurred by Medicare beneficiaries.

The Centers for Medicare and Medicaid Services (CMS) had imposed the sanctions in April 2010, saying the company had not complied with rules about changing drug-plan designs. Aetna did not meet requirements to make sure seniors could continue on their medications during changes to the Aetna plans in 2009 and 2010.

Some Aetna customers who were prescribed drugs on the company's 2009 formulary that were no longer on the formulary the following year did not receive a one-time 30-day transition supply of the drugs as required by the CMS.

(3/18/11)- As noted in our item dated 7/9/10 below, President Obama appointed Dr. Donald M. Berwick as administrator of the Centers for Medicare and Medicaid Services (CMS) as a "recess appointment". That appointment is good through the end of the year unless confirmed by the Senate. The Senate Finance Committee has never held a session to take up this matter and none are presently scheduled.

In a letter to the White House that was signed by 42 Republican senators, the request was made to withdraw the nomination. Some Democratic senators have also indicated that they do not support Dr. Berwick's appointment to the position. It is not clear at this time whether or not the president will continue to back Dr. Berwick's nomination.

His principal deputy, Marilyn B. Tavenner has emerged as a candidate to succeed him. She is the former Virginia secretary of health and human resources with extensive management experience, and the Republicans have not indicated that they would oppose her nomination. Ms. Tavenner is a former nurse who worked for more than two decades at the Hospital Corporation of America, first as a nursing supervisor, then as a hospital executive and subsequently as president of the company's outpatient services group.

(12/10/10)- The Senate unanimously approved a yearlong measure that averts the 25% pay cut that doctors who treat Medicare patients were facing.

In order to pay for the extension, the measure requires individuals to repay excess federal subsidies for health insurance if their income rises. Under the law, the subsidies for people earning up to 400% of the federal poverty level are calculated based on a person's expected earnings.

Repayment of those subsidies is required if a person's income exceeds expected levels, but the repayments are capped at $250 for an individual, or $400 for a family. The law passed by the Senate removes those caps and replaces them with a sliding repayment scale.

(12/4/10)- The House of Representatives approved by a voice vote a measure that had been passed by the Senate that would delay cuts to physicians fees under Medicare payments due to go into effect on December 1. The measure temporarily delays the cuts until January 1, 2011.

The formula for physicians' payments under the Medicare law requires that their fees must be cut when expenditures exceed certain levels. Since the law was enacted there has never been a general cut to the fees from physicians, since many doctors have threatened to leave Medicare if their payments are cut.

(11/11/10)- A recent ruling from the Federal District Court in Pittsburgh went against Medicare officials in setting limits as to what costs Medicare coverage extends to in a skilled nursing facility.

In the case in question, 80-year old Wanda Papciak was placed in a skilled nursing facility after undergoing hip replacement surgery. Medicare officials terminated her coverage after 5 weeks of receiving physical therapy, occupational therapy and skilled nursing coverage.

The Medicare officials terminated her coverage saying that her condition had not improved nor was it likely to get better.

The court reversed the termination of coverage saying she needed skilled nursing care "to maintain her level of functioning" and to prevent her condition from worsening.

Medicare officials argued that Ms. Papciak was receiving only "custodial care", for which the program does not pay. "There must be an expectation that the beneficiary's condition will improve materially in a reasonable and generally predictable period of time, based on the physician's assessment." Medicare officials argued that Ms.Papciak had reached her "maximum functional capacity."

Her attorney, Stella L. Smetanka, a clinical professor of law at the University of Pittsburgh argued that "the services were needed to prevent further deterioration".

The court ruled that skilled care might be reasonable and necessary even if the person's condition is stable and unlikely to improve.

The government has not indicated whether or not it would appeal the decision.

(9/16/10)- Dr. Donald Berwick, administrator of the Centers for Medicare and Medicaid Services, in a speech at a Medicare and Medicaid conference sponsored by America's Health Insurance Plans, the lobby for the health care industry said the agency faced huge challenges under the new health care law.

The law will expand the Medicaid insurance program for the poor to 16 million additional Americans and cut more than $400 billion in provider payments for the Medicare program for the elderly over a decade.

(8/10/10)- In a report that was issued by the Medicare trustees, it was determined that the Medicare hospital trust fund would be exhausted by 2029, 12 years later than last year's projection.

The trustees predicted that the Social Security trust fund would be exhausted in 2037, the same year as projected last year.

Because inflation remains low, the report said, Social Security beneficiaries will probably not receive a cost-of-living (COLA) increase adjustment in 2011, just as they did not receive one this year.

Social Security commissioner Michael J. Astrue stated, that continuing tax revenue would still be sufficient to pay more than 75% of benefits even after exhaustion of the trust fund.

For the first time, money flowing out of the Social Security program this year exceeded money flowing in. A combination of high unemployment, meant less funding coming into the program, and an aging population leading to more people becoming beneficiaries under Social Security was the main reason for this to happen.

Many are calling for an increase in age for eligibility for Social Security entitlement, or reduced benefits. A bipartisan panel, created by President Obama, is due to make its recommendations to him by December 1, as to the steps that should be taken to ensure the solvency of Social Security.

The trustees report on the solvency of Medicare assumes that Medicare will cut payment rates for doctors' services by 23% on December 1, and by a further 6.5% on January 1, as required by the law, but this has never happened before, nor will it happen on those date either, based on past history.

(7/9/10)- President Obama will bypass Congress and make a "recess appointment" making Dr. Donald M. Berwick head of the Centers for Medicare and Medicaid Services (CMS). Please see our item dated 6/8/10 below for more on this matter.

As a recess appointee, Dr. Berwick will have all the powers of a permanent appointee, but as called for under the Constitution, his appointment will expire at the end of the next session of Congress, in late 2011

(6/26/10)- It took them a while, but on Thursday the House, voting 417 to 1, approved the six-month suspension of the required Medicare 21.5% cut of payments to medical professionals that we discuss in our item dated 6/20/10; 6/14/10 et. al. below.

This charade that goes on every year must come to an end. This time however it will be extra costly since Medicare personnel will have to review all claims submitted after June 1, wherein the required cuts took place.

(6/20/10)- Even though the Senate passed the legislation needed to prevent the cut in payments to doctors under Medicare law, it was too late to prevent Medicare from processing the cuts to doctors who have already submitted their June claims. That is because the House has yet to act on the legislation that would have prevented the cuts, and the House can not act on the matter until next week at the earliest.

That means that doctors, nurse practitioners, physical therapists and other providers who billed after May 31,under the Medicare's physician fee schedule will have to resubmit their claims if they want to be made whole. The billings affected by the cut cover the early part of this month. Congress had previously acted in delaying the cuts that were required until the end of May.

The bill passed by the Senate delays the cuts until the end of November, when the elections are out of the way. The Senate approved the measure by a voice vote Friday night, after failing to pass a larger package of fiscal measures the night before. It did not have the required 60 votes to end a Republican filibuster.

The bill passed by the Senate would increase payments to medical providers by 2.2%, and costs about $6.5 billion. It would be paid for through a series of health care and pension changes that both the Democrats and Republicans had agreed to.

(6/14/10)- In our item dated 10/19/09 in Part I of this article, we discuss the fact that the formula for payment to doctors under the Medicare law calls for a cut of 21.5% effective June 1, 2010. There has never been a cut in doctors' payments, even when the formula called for one, in the history of Medicare.

Under pending legislation, this cut would be blocked, and would be replaced by a 2.2 percent increase, at a total cost of $23 billion for the balance of this year, and an additional increase of 1 percent next year.

President Barack Obama in his weekly radio address has called for approval of the increase, and expressed a desire to deal with the formula in a more realistic way in the future.

If you increase the deficit that Medicare is operating under, the premium that beneficiaries pay for belonging to Part B would have to be substantially increased next year to alleviate this problem.

(6/8/10)- Department of Health and Human Services (HHS) secretary Kathleen Sebelius strongly backed President Barack Obama's choice of Dr. Donald Berwick (63 years of age) to become the next head of the Centers for Medicare and Medicaid Services (CMS). That position has been vacant since 2006 after Democrats blocked the confirmation of the Bush administration's nominee.

Several Republicans have indicated that the strongly oppose the nomination.

The American Medical Association plans to send letters of support for the nomination to Congressmen, and 116 health-related groups have already signed a letter to Senate leaders supporting his nomination.

Dr. Berwick delivered the commencement address at the Yale School of Medicine, where his daughter was among the graduates. He is a Harvard Medical School pediatrician and health-quality advocate

(4/5/10)- President Barack Obama has selected Dr. Donald Berwick to become the new head of the Centers for Medicare and Medicaid Services. This position has been vacant for the last years.

Dr. Berwick runs the Boston-based Institute for Healthcare Improvement and is a pediatrics and health-policy professor at Harvard University.

He has focused on improving patient safety, and increased usage of technology in the medical field. He has also worked as an executive at a Massachusetts health-maintenance organization.

Under the terms of the recently enacted health-care reform act, Medicaid coverage will greatly expand coverage starting in 2014. The program is expected to add 16 million Americans by the end of the decade.

One of the biggest hurdles facing Dr. Berwick is the fact that even though more Americans will be covered under the Medicaid program, more than $400 billion in cuts must be instituted in the coming decade.

(1/25/10)- Under Medicare law Part B premiums are required to cover about 25% of the average cost of Medicare Part B services incurred by the enrollees. There are about 42.3 million Americans covered by Medicare Part B, of which about 73% also receive Social Security payments.

Under the Social Security Act's "hold harmless" provision, Medicare can not pass along to Social Security beneficiaries a premium hike that is higher than the increase they would receive through Social Security's annual cost-of-living increase.

For the year 2010 and most likely for the year 2011, there was no cost of living increase (COLA) for Social Security beneficiaries

Since Medicare Part B premiums would not cover the 25% cost of Medicare, the remaining 27% of those covered by Medicare and not receiving Social Security payments must make up for the difference. This group unfortunately includes those Medicare Part B beneficiaries who are joining for the first time.

The affected beneficiaries include the 3% of Medicare Part B recipients who are celebrating their 65th birthday this year, and also the 2% who started collecting Social Security earlier than their "full retirement age". This also includes however, those who postponed getting their Social Security payments past their "full retirement age", since it meant an increased lifetime payment for each year they delayed receiving their payment until they reached the age of 70.

For those falling into this category, Medicare Part B premiums are $110.50 per month instead of the $96.40 per month for lower income beneficiaries. Higher income earners will also be paying higher premiums because of this quirk in the law.

(1/11/10)-The following is the 2010 schedule of what a Medicare beneficiary pays during a skilled nursing facility residency (From Medicare and You-2010):

Under Part A- the following is what a Medicare beneficiary must pay during a hospital stay:

Under Hospice Care:

Medicare doesn't cover room and board when you get hospice care in your home or another facility where you live (like a nursing home)"

Under Part B:

Premiums for Part B will stay the same as for 2009, although higher income beneficiaries will be paying a higher premium than the $96.40 a month level. For new enrollees in Medicare the premium will be at least $110.50 per month. Please see our item dated January, 2010 to see why this situation arose.

For individuals who earn $85,000 or less and for couples who earn $170,000 or less the premium for Part B is $96.40 per month for Medicare Part B coverage.

For individuals earning $85,001 up to $107,000, or couples earning from $170,001 to $214,000 the premium will be $134.90. For individuals earning from $107,001 to $160,000, or couple earning from $214,001 to $320,000 the premium is $192.70. For individuals earning from$160,001 to $213,000, or couples earning from $320,001 to $426,000 the premium is $250.59 and for individuals earning $213,001 or above and couples earning $426,001 or above the premium is $308.30

New enrollees in Part B will pay 15% more than that, $110.50 a month.

Benefit Period

A " benefit period" starts when the beneficiary first enters a hospital and ends when there has been a break of at least 60 consecutive days since inpatient hospital or skilled nursing care was provided. There is no limit to the number of benefit periods covered by Part A during a beneficiary’s lifetime; however, inpatient hospital care is normally limited to 90 days during a benefit period and co-payment requirements ($267 each day)apply for days 61 through 90. If a beneficiary exhausts the 90 days of inpatient hospital care available, he or she can elect to use days of Medicare coverage from a non renewable "lifetime reserve" of up to 60 total additional days. Once used up the 60 days is gone forever. You are responsible for the co-insurance amount of $438 per day while using up this 60 day "lifetime reserve".

 (11/2/09)- Most Medicare eligible beneficiaries should have received their copy of the 2010 "Medicare and You" handbook, which is issued by the government to help you understand any changes made in Medicare and Medicare Advantage plans.

As a quick reminder, there is Medicare Part A, which covers hospitalization and is provided at no charge to enrollees, and Medicare B, which covers fees from doctors and other health care providers, and requires a monthly premium. Premiums for Part B will stay the same as for 2009, although higher income beneficiaries will be paying a higher premium than the $96.40 a month level. For new enrollees in Medicare the premium will be at least $110.50 per month. Please see our item dated January, 2010 to see why this situation arose.

For individuals who earn $85,000 or less and for couples who earn $170,000 or less the premium for Part B is $96.40 per month for Medicare Part B coverage.

For individuals earning $85,001 up to $107,000, or couples earning from $170,001 to $214,000 the premium will be $134.90. For individuals earning from $107,001 to $160,000, or couple earning from $214,001 to $320,000 the premium is $192.70. For individuals earning from$160,001 to $213,000, or couples earning from $320,001 to $426,000 the premium is $250.59 and for individuals earning $213,001 or above and couples earning $426,001 or above the premium is $308.30

New enrollees in Part B will pay 15% more than that, $110.50 a month.

Straight Medicare covers about 35 million beneficiaries, and they need not do anything if they feel their coverage is sufficient. If however, a beneficiary wants to have prescription drug coverage he or she must enroll in Part D. About 17.5 million Medicare beneficiaries have enrolled in Part D coverage.

Since there will not be an increase in the Social Security cost-of-living increase in 2010, premiums will remain the same for Part B coverage.

The annual enrollment period for Medicare begins on November15th and runs through December 31, 2009. Insurers have been sending out their promotional material since October 1.

If you did not sign up for Medicare Part D when you were first eligible to be covered by it, you will be assessed a 1% penalty per month if and when you do sign up, unless you had creditable prescription drug coverage under another plan.

To see more about Medicare Advantage, please see our article on this topic. There are about slightly less than 11 million Medicare beneficiaries who belong to Medicare Advantage plans.

If you need assistance in making your choices you can go to the Medicare site or call or visit your State Health Insurance Assistance Program, known as SHIP, which is run by the government. Counselors provide information and help you compare plans at no charge. To find the SHIP in your state, to to  

To see Part I of the article Medicare -Who Pays and How Much-Part I


 By Allan Rubin
updated October 20, 2022

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